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Market Update 07/05/2025

Welcome to our daily market update, where we help keep you informed on the latest happenings in the world of FX. If you have any questions or would like anything further explained, please don’t hesitate to reach out to your account manager or email info@cafx.com

Forex Market

USD: Broad-based Weakness Amid Trade Deficit Concerns and FOMC Caution

The US dollar softened across the board overnight. A wider-than-expected trade deficit for March (USD -140.5b vs -137.2b exp.) signaled potential front-loading ahead of tariff risks. Meanwhile, FOMC members are expected to maintain the Fed funds rate at 4.25–4.50%, emphasizing a cautious, data-dependent approach amid persistent inflation risks and economic uncertainty. The greenback was offered into the NY afternoon with USD/JPY sliding to 142.355 and USD/CAD dipping to 1.3751 lows.

AUD: Remains Buoyant

The AUD/USD traded in a 0.6438–0.65015 range, briefly hitting fresh highs near 0.6500 before consolidating around 0.6495/00. AUD strength was driven by broad USD weakness and improving risk sentiment.

Key Economic Data Ahead (Sydney Time)


General Market

  • Wall St.: Another negative session saw the Nasdaq down -0.9%, the S&P 500 -0.8%, and the Dow Jones -1.0%. US 10-year yields fell 4bps to 4.30%, while crude oil rebounded +3.2% to $62.20/bbl.

 

  • Asia: The Hang Seng rose +0.7% and Shenzhen +1.0%, while the Nikkei was closed. ASX 200 edged down -0.1% amid a drag from the healthcare sector (-1.9%).

 

  • Europe: Final April PMIs surprised to the upside, but equities still fell — DAX -1.0%, Stoxx -0.8%, CAC and FTSE closed mixed.

 

  • FX: AUD/USD touched 0.65015 highs, EUR/USD 1.13805, GBP/USD 1.3402. USD/JPY fell to 142.355, USD/CAD to 1.3751.

Key Headlines to Watch

  • NZ Labour Data: Q1 unemployment rate and wage data released this morning could shape short-term NZD momentum. Markets are watching for any dovish tilt from the RBNZ later in their Financial Stability Report.

 

  • USD Trade Deficit Widening: The US March trade gap widened more than expected, reinforcing concerns around tariff front-loading and global trade flows.

 

  • US-China Trade Talks Eyed: Treasury Secretary Bessent and Commerce Secretary Greer are reportedly planning talks with China — potential risk-on trigger that could support AUD, CNH, and EMFX.

Mid-market rates.

Currency Pair Mid-market Rate
AUD/USD 0.6490
AUD/NZD 1.0811
AUD/JPY 92.96
AUD/CNY 4.6883
AUD/EUR 0.5730
AUD/GBP 0.4868
AUD/HKD 5.0330

 

Disclaimer:

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